This is an appeal from a judgment for defendants entered in the Camden County District Court.

Under date of January 10, 1948, the defendants executed and delivered a promissory note in the sum of $590.04 to the order of J. Rothman, Contractors. The note was endorsed and delivered to the plaintiff before maturity and for value. The endorsement was in the following form:

"Pay to the order of

EASTERN ACCEPTANCE CORPORATION WITHOUT RECOURSE

except that the undersigned indorser warrants that the undersigned has furnished and installed all articles and materials and has fully completed all work which constitutes the consideration for which this note was executed and delivered by the maker.

J. ROTHMAN, Contractors

By J. ROTHMAN

(Dealer)

Title Owner"

The District Court found that there had been a failure of consideration between the payee and the makers of the note but also found that when the plaintiff purchased the note "it had no notice or knowledge of the defenses of the defendants." Nevertheless it entered judgment for the defendants on the ground that since the note had been transferred to the plaintiff by a qualified endorsement it remained subject to all defenses between the payee and the makers.

It is well recognized that an endorsement "without recourse" is not restrictive under section 36 of the Uniform Negotiable Instruments Act (R.S. 7:2-36) but is a qualified endorsement which, under section 38 (R.S. 7:2-38), does not impair the negotiable character of the instrument. 5 U.L.A. (Part 1) p. 478 (1943). Its purpose is simply to exempt the endorser from liability for payment of the instrument in the event it is dishonored at maturity and its presence does ...

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